The idea of retirement is rapidly evolving amid shifting financial landscapes, evolving job markets and a growing economy. While early retirement had gained traction in the last few years, the latest trend is micro-retirement. The new concept, popular among youth, especially Gen Z, refers to choosing breaks to avoid burnout. Long breaks from regular employment also offer an opportunity to chase other dreams.
Unlike paid sabbaticals, micro-retirements aren’t company-approved, and there is no salary or job security either. Still, some employees are willing to take that risk as they prioritise work-life balance and flexibility.
This trend also underscores the need for companies to recognise employees’ needs for flexibility and well-being. With Gen Z and millennials now making up over half the workforce, companies can no longer afford rigid employment policies.
In case you are someone who is considering a micro-retirement to support personal goals, prevent burnout, or simply spend time with friends and family, take into account these factors before taking the plunge:
One needs to be certain about the potential impact of stepping away from the workforce. Without another offer in hand, micro-retirement can lead to long-term unemployment. Hence, it is important to weigh the potential challenges and impact on mental health before making any such commitments.
In addition to these factors, the financial challenges could be daunting. Remaining unemployed for a longer duration could hurt your finances or even push you into a debt trap.
Hence, those who are considering micro-retirement should focus on these steps to avoid long-term financial stress:
1. Before quitting your job, create an emergency fund to cover expenses for the duration of unemployment. This can include expenses for utility bills, groceries, insurance premiums and EMIs, among other things.
2. Consider cutting non-essential spending, such as unused subscriptions, limit dining out and postpone major purchases.
3. Before taking a micro-retirement, consider using your existing skills to earn additional income. This could include freelancing, tutoring, or consulting.
4. Consider moving extra income into short-term fixed deposits. They offer guaranteed returns over a pre-defined period, helping you build funds with financial flexibility as per your needs.
5. It’s also crucial to have a defined plan for the time you want to remain unemployed. This can include upskilling targets, pursuing any courses or hobbies, among other things, to keep yourself engaged.
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